Another Setback for GM's Hummer Sale to China

Seems GM will need to find somebody else to take Hummer off its hands. The Chinese government isn’t going to approve a proposed sale to Sichuan Tengzhong, Bloomberg News reports today, citing two people briefed on the deal. The sale of the notorious gas guzzling Hummer wouldn’t be in line with Beijing’s aim to promote greener cars. “It’s only normal for the Chinese government not to approve the deal,” HIS Global Insight analyst Lin Huaibin told Bloomberg. “To allow this type of vehicle on a large scale isn’t in line with government policy.”

That’s been clear for a while, as my colleague Frederik Balfour wrote back in June. “You have got to give Beijing credit for its green stance against gas guzzlers,” he wrote. “Indeed, the government already has higher fuel emissions standards than most U.S. states, and has introduced tax breaks to encourage car buyers to buy vehicles with smaller engines.”

To be sure, the Tengzhong-Hummer deal isn’t officially dead yet, and assistant commerce minister Wang Chao told reporters in Beijing today that the ministry had not yet received an application for an acquisition. No formal application means no formal rejection yet. Hummer is a side show, though, compared to the really important Chinese auto deal, Geely’s possible acquisition of Volvo from Ford. The two had hoped to sign a deal before the Chinese New Year on Feb. 14. That deadline has come and gone and we’re still waiting. Missing out on Hummer is no big loss for China; a Volvo loss would prove to be far more damaging to Chinese ambitions to be a play in the global auto industry.

Read the original story at BusinessWeek Eye on Asia Blog